An electric motor is rated at 10 horsepower (HP) and costs $800. Its full load efficiency is specified to be 85%. A newly designed, high-efficiency motor of the same size has an efficiency of 90% but $1200. Is is estimated that the motors will operate at a rated 10HP output for 1500 hours a year, and the cost of energy will be $0.07 per kilowatt-hour.
Each motor is expected to have a 15 year life. At the end of 15 years, the first motor will have a salvage value of $50 and the second motor will have a salvage value of $100. consider the MARR to be 8%. (note : 1HP=0.7457 kw). Determine which motor should be installed based on the PW criterion.